Correlation Between Electronic Control and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Electronic Control and Dow Jones at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Electronic Control and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Control Security and Dow Jones Industrial, you can compare the effects of market volatilities on Electronic Control and Dow Jones and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Electronic Control with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Control and Dow Jones.
Diversification Opportunities for Electronic Control and Dow Jones
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Electronic and Dow is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Control Security and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Electronic Control is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Electronic Control Security are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Electronic Control i.e., Electronic Control and Dow Jones go up and down completely randomly.
Pair Corralation between Electronic Control and Dow Jones
Given the investment horizon of 90 days Electronic Control Security is expected to generate 187.57 times more return on investment than Dow Jones. However, Electronic Control is 187.57 times more volatile than Dow Jones Industrial. It trades about 0.13 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 0.45 in Electronic Control Security on August 27, 2024 and sell it today you would lose (0.39) from holding Electronic Control Security or give up 86.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Control Security vs. Dow Jones Industrial
Performance |
| Timeline |
Electronic Control and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Electronic Control Security
Pair trading matchups for Electronic Control
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Electronic Control and Dow Jones
The main advantage of trading using opposite Electronic Control and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Control position performs unexpectedly, Dow Jones can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dow Jones will offset losses from the drop in Dow Jones' long position.| Electronic Control vs. Boxlight Corp Class | Electronic Control vs. Siyata Mobile | Electronic Control vs. ClearOne | Electronic Control vs. HUMANA INC |
| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.
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